Nigeria’s President, Bola Tinubu has ordered the Nigeria National Petroleum Corporation Limited (NNPCL) to sell crude oil to the Dangote Refinery and other upcoming in-country built refineries in the country’s local currency, the Naira.
This was a measure adopted at the Federal Executive Council (FEC) meeting to ensure the stability of the pump price of refined fuel and the dollar-Naira exchange rate.
Over the last few weeks, it has been a tug of war over which body would blink first, with allegations and counter allegations flooding the news space; at the foundation being the demand by Dangote Refinery for favourable considerations in local crude oil supply.
The Dangote Refinery at the moment requires 15 cargoes of crude, at a cost of $13.5 billion yearly. NNPC has committed to supply four.
However, this order is a lifeline to the debacle as the FEC has approved that the 450,000 barrels meant for domestic consumption be offered in Naira to Nigerian refineries, using the Dangote refinery as pilot. The exchange rate will be fixed for the duration of this transaction.
Afreximbank and other settlement banks in Nigeria will facilitate the trade between Dangote and NNPC Limited. The game changing intervention will eliminate the need for international letters of credit. It will also save the country of billions of dollars used in importing refined fuel.
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